Refinancing your home loan to take advantage of a lower interest rate might save you money. Before you switch, make sure the benefits outweigh the costs.
Before you decide to switch
If you’re thinking about switching home loans, you’re probably focused on getting a better interest rate. But there are other things to consider before switching.Ask your current lender for a better deal
Tell your current lender you are planning to switch to a cheaper loan offered by a different lender. To keep your business, your lender may reduce the interest rate on your current loan. If you have at least 20% equity in your home, you’ll have more to bargain with. Having a good credit score will also help with negotiations. Compare any loan they offer you with the other loans you’re considering.Negotiate the length of the new loan
Some lenders will only refinance with a new 25 or 30 year loan term. You could end up with a longer loan term than the years left to pay off your current mortgage. The longer you have a loan, the more you’ll pay in interest. If you do decide to switch, negotiate a loan with a similar length to your current one.Weigh up the cost of lender’s mortgage insurance
If you have less than 20% equity in your home, you might have to pay lender’s mortgage insurance (LMI). This can increase the cost of switching and outweigh the savings you’ll get from a lower interest rate. If you decide to switch, we can help you ask for a refund of some of the LMI from your current loan.Check if you'll save by switching
Use our mortgage switching calculator to work out if you’ll save money by changing home loans.
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